I love when this happens. We had just talked about this and concluded this was inevitable. Like the housing buble, timing was the only issue. Too bad we didn't short this currency!
this is not surprising in the slightest bit. Bitcoins happen to be a hacker created form of currency without any real backing. the fact that they skyrocketed in the firstplace was of shock to me. because of their extreme growth, it became a bubble just as the housing market had become a bubble in the '00s and the fact that it dropped so quickly was due in part to how fast it rose up the ranks. The only thing that remains a concern is whether or not this is the bottom of the curve or even if bitcoins can survive this. The fiat currency currently floating around the world and the american currency that most of the world is based on can lead to the end of the bitcoins because they control the market. the thing with bitcoins is either it will do amazingly or it will fail miserably. personally i think its going to fail, if a small country economy has trouble surviving, even with some sort of financial backing, what makes BitCoins, with no government or real financial banking think it would survive? and by the slight chance it does, it will be of limited use and will remain at a low level.
Ever since the video game Team Fortress 2 introduced item trading of virtual items, the idea of digital economies started to interest me. Can economy work if it all represents bytes on some server somewhere? Can people put confidence in systems of currency where you technique are just buying licenses to using a server? I think the answer is that digital economies will become a small but substantial part of the global market. I read plenty of articles on these digital economies.
Here is how it seems to work. A folder of Bitcoins is a folder of authentication codes. You can give these authentication codes to another person in exchange for goods and services. Assumingly, when one gives away a Bitcoin, a new authentication code is created to represent that specific Bitcoin as to prevent the original person accessing it again. Each transaction also involves a secret digital signature. Confirmed transactions are kept on a public transaction log called the “Blockchain.” The Bitcoin obviously involves a lot of Cryptography.
The Blockchain is not a centralized server, but is actually a distributed system where multiple computers work together to authenticate and keep log of transactions. This is what is meant when it is said to work on peer to peer networks, your transactions are stored and processed over a collective an opposed to a centralized server. To have YOUR computer join this collective is called Mining. You sacrifice a bit of your computers CPU to handle calculation for the network, and in return you receive a bit of money from the transaction themes and you receive newly minted Bitcoin.
Another important part about the Bitcoin is that they are supposed to be limited in supply. Think gold. Not all of the Bitcoin are an accessible right now. They need to be mined as I explained in the previous paragraph. Bit coins are valuable because they are useful and scare (according to the website). This is fiat money at its finest.
The recent plunge in value indicates that the Bitcoins, despite truly ingenious infrastructure and math, doesn’t have that much value. This is certainly what I would call a niche currency. How many people who use Bitcoins actually understand Bitcoins? The reason for this is that this currency has less backing it up then then other fiat currencies. The dollar is backed up by the US government’s ability to tax. Most people can’t understand how Bitcoins are backed up, as in; it’s backed up by dreams. The US government confirms that people will want the dollar. Nothing confirms Bitcoin other than a very small set of unique features. At least in Team Fortress 2, I’m trading in entertainingly looking virtual objects.
[I’m not trying to grade grub by creating a mini-essay. I did this to help myself understand Bitcoins, because they personally interesting to me]
It's always interesting to see how any currency--even bitcoins--trades on the open market. Although it seems like a bitcoin may not have any official backing (e.g. US Dollar, Euro), traders treat it like any other currency on the exchange these markets. That being said, this means that bitcoins are highly susceptible to fluctuations in the market, and it does look like bitcoins have hit a bubble. I'm not too familiar with the entire concept, but it does seem very interesting how a currency created by a "hacker" could develop this far. Stories like these always fascinate me, so I'll be sure to keep an eye on it!
The whole concept of bit coins seems a little crazy, especially the blind faith in a programmer so I'm not that surprised the bubble bursted. Personally I'm curious as to why it became so popular recently considering its been out for years now.
ALso I found it interesting how the video stated those who knew the concepts of supply and demand bought most of the fixed supply to raise prices. This is a nice example of how economic knowledge helps.
I think that this shows how unstable BitCoins are. I was never truly confident with this in the first place. I wouldn't doubt that people make money with this system, but the way it is set up, it seems that more people will lose money from this. I still do not even understand completely how it works. It just seems like another currency; how can one make money from changing their money to a different currency?
I believe the market for the bitcoin is too unstable and susceptible to cyber attacks. I think that people dont believe in the bitcoin and it doesnt have much value so unless something significant happens, the value will continue to drop until the worth is bitcoins is basically zero. By the constant drops and the lagging of the site, it seems that the bitcoins will reach be worth nothing sooner rather than later. -Vihar Shah AP MICRO
I think that the market for Bitcoin's is too temperamental for its original intent: to have a means of exchange. Not only were there cyber attacks in the past months, but everyone became concerned and traded in all thier bit coins, heavily devaluing and dropping its price. As noted, the bubble has bursted as the price dropped 70% within two days, indicating it is too volatile of a currency. I still do not understand what caused the huge panic to sell all the bitcoins, however. Sahil Parikh AP Micro Period 6
After the value of the bitcoin spiked dramatically and then fell, I think it is pretty obvious that this type of currency is way too volatile to be used as a means of exchange. Because of this fluctuation, I believe that this will cause the holders of bitcoins to desire the use of dollars instead to purchase goods. I was very surprised to even read that so many people invested their money into a currency that is unsustainable because it is not backed by any sort of a commmodity. I think that until more companies start to accept bitcoins as a means of payment,their value will remain low and it will not a good idea to use them.
I think that this article just shows how volatile the market for BitCoins is. The fact that the BitCoin's worth is fluctuating so rapidly shows that it's a risky investment. I also find it intriguing that this digital currency was started by a hacker four years ago. Although the idea of BitCoins is interesting, I feel that it is too unstable.
I was not aware that BitCoins even existed. I am not really sure what it exactly does but to hear that it was developed by a hacker who still has stayed anonymous to this day, I would not trust such a way of transaction. Also, this article shows how stocks can plummet even if it looks as if it will skyrocket. It was $266 and it dropped to $77 in a matter of two days. That is mindblowing.
“Recent debates on the subject generally consist of one side claiming that an appeased enemy is an empowered enemy, as proved to be the case with Hitler.” This quotes states how people were scared of Hitler, they got a word’s meaning confused only because they feared him. They thought if they didn’t follow him, he would kill them as he was so powerful. I feel bad for those people who had to do everything forcefully. Just like Hitler, Chamberlain was stubborn too, when he decided that he want Czechoslovakia, he did everything he could to get it. After looking at what was happening in Europe even Winston Churchill had made an offer of shame or war, and he also said that even if they chose shame it would cause war. He purposely said a eloquent expression, so that no one had a choice but war. pd9 IP
I still dont really understand the concept of BitCoins, but i think that it would be so stupid to invest in them. It seems so dangerous because we dont know anything about it. Who controls the worth of thid currency or the amount of this currency available to people? I am not surprised that the price has plumetted.
It's pretty crazy how fast it fell in two days. That just goes to show it pays to do some research before you invest.
ReplyDeleteKJL PD 6
this is not surprising in the slightest bit. Bitcoins happen to be a hacker created form of currency without any real backing. the fact that they skyrocketed in the firstplace was of shock to me. because of their extreme growth, it became a bubble just as the housing market had become a bubble in the '00s and the fact that it dropped so quickly was due in part to how fast it rose up the ranks. The only thing that remains a concern is whether or not this is the bottom of the curve or even if bitcoins can survive this. The fiat currency currently floating around the world and the american currency that most of the world is based on can lead to the end of the bitcoins because they control the market. the thing with bitcoins is either it will do amazingly or it will fail miserably. personally i think its going to fail, if a small country economy has trouble surviving, even with some sort of financial backing, what makes BitCoins, with no government or real financial banking think it would survive? and by the slight chance it does, it will be of limited use and will remain at a low level.
ReplyDeleteAP Micro - PD 6 – MTC
ReplyDeleteEver since the video game Team Fortress 2 introduced item trading of virtual items, the idea of digital economies started to interest me. Can economy work if it all represents bytes on some server somewhere? Can people put confidence in systems of currency where you technique are just buying licenses to using a server? I think the answer is that digital economies will become a small but substantial part of the global market. I read plenty of articles on these digital economies.
Here is how it seems to work. A folder of Bitcoins is a folder of authentication codes. You can give these authentication codes to another person in exchange for goods and services. Assumingly, when one gives away a Bitcoin, a new authentication code is created to represent that specific Bitcoin as to prevent the original person accessing it again. Each transaction also involves a secret digital signature. Confirmed transactions are kept on a public transaction log called the “Blockchain.” The Bitcoin obviously involves a lot of Cryptography.
The Blockchain is not a centralized server, but is actually a distributed system where multiple computers work together to authenticate and keep log of transactions. This is what is meant when it is said to work on peer to peer networks, your transactions are stored and processed over a collective an opposed to a centralized server. To have YOUR computer join this collective is called Mining. You sacrifice a bit of your computers CPU to handle calculation for the network, and in return you receive a bit of money from the transaction themes and you receive newly minted Bitcoin.
Another important part about the Bitcoin is that they are supposed to be limited in supply. Think gold. Not all of the Bitcoin are an accessible right now. They need to be mined as I explained in the previous paragraph. Bit coins are valuable because they are useful and scare (according to the website). This is fiat money at its finest.
The recent plunge in value indicates that the Bitcoins, despite truly ingenious infrastructure and math, doesn’t have that much value. This is certainly what I would call a niche currency. How many people who use Bitcoins actually understand Bitcoins? The reason for this is that this currency has less backing it up then then other fiat currencies. The dollar is backed up by the US government’s ability to tax. Most people can’t understand how Bitcoins are backed up, as in; it’s backed up by dreams. The US government confirms that people will want the dollar. Nothing confirms Bitcoin other than a very small set of unique features. At least in Team Fortress 2, I’m trading in entertainingly looking virtual objects.
[I’m not trying to grade grub by creating a mini-essay. I did this to help myself understand Bitcoins, because they personally interesting to me]
Ben Pleat Micro Pd. 6
ReplyDeleteIt's always interesting to see how any currency--even bitcoins--trades on the open market. Although it seems like a bitcoin may not have any official backing (e.g. US Dollar, Euro), traders treat it like any other currency on the exchange these markets. That being said, this means that bitcoins are highly susceptible to fluctuations in the market, and it does look like bitcoins have hit a bubble. I'm not too familiar with the entire concept, but it does seem very interesting how a currency created by a "hacker" could develop this far. Stories like these always fascinate me, so I'll be sure to keep an eye on it!
Richard Per 6
ReplyDeleteThe whole concept of bit coins seems a little crazy, especially the blind faith in a programmer so I'm not that surprised the bubble bursted. Personally I'm curious as to why it became so popular recently considering its been out for years now.
ALso I found it interesting how the video stated those who knew the concepts of supply and demand bought most of the fixed supply to raise prices. This is a nice example of how economic knowledge helps.
I think that this shows how unstable BitCoins are. I was never truly confident with this in the first place. I wouldn't doubt that people make money with this system, but the way it is set up, it seems that more people will lose money from this. I still do not even understand completely how it works. It just seems like another currency; how can one make money from changing their money to a different currency?
ReplyDeleteAP Micro p. 6
Peter M
I believe the market for the bitcoin is too unstable and susceptible to cyber attacks. I think that people dont believe in the bitcoin and it doesnt have much value so unless something significant happens, the value will continue to drop until the worth is bitcoins is basically zero. By the constant drops and the lagging of the site, it seems that the bitcoins will reach be worth nothing sooner rather than later.
ReplyDelete-Vihar Shah AP MICRO
I think that the market for Bitcoin's is too temperamental for its original intent: to have a means of exchange. Not only were there cyber attacks in the past months, but everyone became concerned and traded in all thier bit coins, heavily devaluing and dropping its price. As noted, the bubble has bursted as the price dropped 70% within two days, indicating it is too volatile of a currency. I still do not understand what caused the huge panic to sell all the bitcoins, however.
ReplyDeleteSahil Parikh AP Micro Period 6
Victoria P - Period 6
ReplyDeleteAfter the value of the bitcoin spiked dramatically and then fell, I think it is pretty obvious that this type of currency is way too volatile to be used as a means of exchange. Because of this fluctuation, I believe that this will cause the holders of bitcoins to desire the use of dollars instead to purchase goods. I was very surprised to even read that so many people invested their money into a currency that is unsustainable because it is not backed by any sort of a commmodity. I think that until more companies start to accept bitcoins as a means of payment,their value will remain low and it will not a good idea to use them.
I think that this article just shows how volatile the market for BitCoins is. The fact that the BitCoin's worth is fluctuating so rapidly shows that it's a risky investment. I also find it intriguing that this digital currency was started by a hacker four years ago. Although the idea of BitCoins is interesting, I feel that it is too unstable.
ReplyDeleteAustin
Period 6 micro
Jeff Chang Per 6
ReplyDeleteI was not aware that BitCoins even existed. I am not really sure what it exactly does but to hear that it was developed by a hacker who still has stayed anonymous to this day, I would not trust such a way of transaction. Also, this article shows how stocks can plummet even if it looks as if it will skyrocket. It was $266 and it dropped to $77 in a matter of two days. That is mindblowing.
“Recent debates on the subject generally consist of one side claiming that an appeased enemy is an empowered enemy, as proved to be the case with Hitler.” This quotes states how people were scared of Hitler, they got a word’s meaning confused only because they feared him. They thought if they didn’t follow him, he would kill them as he was so powerful. I feel bad for those people who had to do everything forcefully. Just like Hitler, Chamberlain was stubborn too, when he decided that he want Czechoslovakia, he did everything he could to get it. After looking at what was happening in Europe even Winston Churchill had made an offer of shame or war, and he also said that even if they chose shame it would cause war. He purposely said a eloquent expression, so that no one had a choice but war.
ReplyDeletepd9 IP
I still dont really understand the concept of BitCoins, but i think that it would be so stupid to invest in them. It seems so dangerous because we dont know anything about it. Who controls the worth of thid currency or the amount of this currency available to people? I am not surprised that the price has plumetted.
ReplyDeleteIsaac p 6